Frost Swoops In To Buy More Cheap Prolor Biotech Shares

Investors may be a bit weary of jumping into PROLOR Biotech (NYSEMKT:PBTH) after the company announced the closing an underwritten public offering, but that hasn't kept billionaire Phil Frost, chairman of generic drugmaker Teva Pharmaceutical Industries (NASDAQ:TEVA) from buying another big chunk of the company.

In the middle of last week, PROLOR issued nearly 7.5 million shares of its common stock at a price to the public of $5.00 per share, including 975,000 shares issued to the underwriters pursuant to their over-allotment option, which was exercised in full. According to PROLOR, the aggregate net proceeds to the firm from the offering will be approximately $35.0 million.

PROLOR is the Israeli clinical-stage biotech that aims to transform the hormone treatment market. We've covered the stock extensively as it starts final trials for U.S. approval.

President Shai Novik has told us, Bloomberg and others that they "will be first to market with a growth-hormone product" that can be injected once a week instead of daily." Analysts think this will be a market transformer as they don't see high-quality competition for this drug. In addition, in April, the firm reported positive preclinical results from an animal study of its long-acting obesity/type II diabetes drug candidate MOD-6030. The study results were presented at GTC's 5th Diabetes Drug Discovery and Development Conference in Boston.

PROLOR, which was already 21 percent-owned by Frost, prior to the filings may be looking to fully acquire the company through Teva as its products become more lucrative, according to Raghuram Selvaraju, an equity analyst at Morgan Joseph TriArtisan who covers Israeli biotechnology companies.

Despite running as high as $6.60 after we started covering the company earlier in the year, shares of the company closed the week trading back down to 200 day moving average levels.

Click to enlarge(Click to enlarge)

We don't blame retail investors who may be waiting to see what the proposed financing details look like before jumping in, but there is little doubt that PBTH will continue to get some big bets placed behind it going forward. We continue to feel that this one shows all the signs of being a winner- long term.

Analysts like Morgan Joseph's Selvaraju who watches trends in the sector for institutional and smart-money clients gives Prolor a value of $900 million, of which $320 million is based on the company's most advanced drug candidate alone.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.